February’s job report from the Bureau of Labor Statistics reaffirmed recent positive indicators confirming a resilient U.S. economy. Employers added 242,000 jobs last month, lifting the 3-month average to nearly 230,000 jobs. Although considerable headwinds persist, the impact on the economic outlook at home appears to be fading. Furthermore, energy prices have stabilized as the number of rotating rigs in the U.S. has dropped to a multi-decade low.
While the headline figure was promising, the types of jobs added last month tended to occur on the lower end of the pay scale. Following the addition of 13.2 million jobs over the past 65 months, a shift from core employment growth to support and secondary positions was widely expected. Nonetheless, further additions in the professional and business services and other office-using sectors will be necessary to lift wages at the Fed’s target pace.
The unemployment rate remained steady at 4.9 percent last month as new entrants to the job market offset those that were hired. Attractive job postings have pulled up the labor force participation rate 50 basis points over the past six months to 62.9 percent. The widely quoted U-6 unemployment rate, which includes individuals marginally attached to the labor force and those employed part time for economic reasons, has plunged 170 basis points over the past 12 months to 9.7 percent. As headline unemployment hovers near the full-employment level, the U-6 will become a stronger gauge for the labor market in the coming months.
For single-family home investors, last month’s job report was positive. Retail trade positions soared by 55,000 spots, building on January’s increase of 62,000 jobs. These positions generally preclude homeownership and support renter demand. Construction, meanwhile, which can be a transient trade, tacked on 19,000 jobs in February, further brightening the outlook for the single-family rental market.